Tax Relief for Families, Students, Farmers

ST. PAUL, Minn – The Omnibus Tax Bill expands tax credits for working families, helps ease the growing burden of student loan payments, and delivers property tax relief to farmers and small businesses across Minnesota. The bill passed the Minnesota Senate today with a bipartisan vote of 55-12; its next stop is the governor’s desk. Sen. Rod Skoe (DFL-Clearbrook) authored the omnibus bill as chair of the Senate Tax Committee.

“This bill is a responsible approach to making Minnesota’s tax code more progressive while maintaining a balanced budget,” said Skoe. “We’re helping make higher education more affordable by expanding the 529 Savings Program and creating a student loan payment credit. We’re also reducing the property tax burden for farmers and small businesses throughout our state.”

One highlight of the omnibus bill is an expansion of the Working Family Credit, authored by Sen. Ann H. Rest (DFL-New Hope).

“This bill produces a more robust Working Family Credit for Minnesota,” said Rest. “We can now extend these benefits to more families, including those without children, and help more households achieve financial security. We also invest in great programs that provide tax filing services and financial counseling to low-income and disadvantaged Minnesotans.”

Another important section of the legislation is a “Marketplace Fairness” proposal, which reaffirms the state’s right to collect sales tax on taxable goods and services in Minnesota, including online purchases, regardless of where the seller is located. This proposal levels the playing field and ensures that out-of-state sellers collect and remit sales tax just as businesses physically located in Minnesota do.

The $257 million Omnibus Tax Bill provides significant income, property, and sales tax relief in 2017. Provisions of the bill include:

Income taxes:

  • Working Family Credit: $48.8 million in 2017, $102 million in the next biennium. This provision reduces the tax burden for 386,000 low and middle income tax filers by an average of $125, and expands eligibility for the credit to an additional 109,500 Minnesotans – including young adult workers without children.
  • Student loan credit: $36.5 million in 2017, $75.4 million in the next biennium. This provision creates a credit of up to $1,000 for eligible individuals who are paying for student loans. The percentages of student loan payments eligible for the credit are:
    • 50 percent of qualified educational loans.
    • 65 percent of qualified loans for eligible individuals in a public service job.
    • 75 percent of qualified loans for eligible individuals in an education profession.
  • College savings plans: $15.8 million in 2017, $33.2 million in the next biennium. This bill establishes a maximum credit of $500 per year and an income tax subtraction of up to $1,500 for qualified contributions to Minnesota’s 529 college savings plans.
  • Dependent care credit: $9.8 million in 2017, $22.8 million in the next biennium. This credit provides families more economic security and allows flexibility for those with small children, aging parents, and family members with disabilities. The bill expands the number of Minnesotans eligible for the state’s dependent care tax credit and increases the maximum credits allowed.
  • Military service credit: $4.5 million in 2017, $9.1 million in the next biennium. The bill expands the existing military service income tax credit to more veterans across Minnesota, including those who have been permanently and totally disabled as a result of their service. As an alternative, the supplemental budget bill includes an income tax subtraction for military pension benefits, bringing Minnesota in line with the vast majority of other states.
  • Stillbirth tax credit: $800,000 in 2017, $1.6 million in the next biennium. Another provision carried in the supplemental budget bill provides a one-time tax credit of $2,000 to the parents of a stillborn child. The credit will help grieving families to offset medical and funeral services that are not covered by insurance.

Property taxes:

  • Aids to local governments: The bill adds stability to local budgets with a $10 million annual increase in County Program Aid and a $20 million annual increase in Local Government Aid.
  • School building bonds agricultural credit: $90.6 million in the next biennium. The bill creates a property tax credit for agricultural land owners who find their entire property subject to new taxes for school building levies. An estimated 240,000 parcels of land across Minnesota will qualify for the credit.
  • Business property tax cuts: This bill exempts the first $100,000 in commercial and industrial property values from the state levy. This change will save Minnesota businesses over $115 million in the next biennium.

This omnibus bill invests in Minnesota workers and families by providing targeted tax credits and refunds to reduce economic inequality and help people out of poverty. The tax provisions in this bill will benefit the people across the state who need it most.

Senator Rod Skoe
Rod Skoe represents District 2, which includes all or portions of Becker, Beltrami, Clearwater, Hubbard, Lake of the Woods, Mahnomen, Otter Tail and Wadena counties in the northwestern part of the state. He chairs the Tax Committee.

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